3. Polemical Writings
“The period between 1820 and 1830 is metaphysically speaking the most important period in the history of English political economy—theoretical tilting for and against the Ricardian theory, a whole series of anonymous polemical works, the most important of which are quoted here, especially in relation to those matters which concern our subject. At the same time, however, it is a characteristic of these polemical writings that all of them, in actual fact, merely revolve around the definition of the concept of value and its relation to capital.” (p 109)
The first crisis of overproduction occurred in 1825. But, the period from around 1815 to 1830 can be considered as the Autumn or Crisis phase of the long wave cycle, when the conditions for such crises become most acute. Similarly, the period from around 1865 to 1880 demonstrates such characteristics. It also saw the start of the introduction of neoclassical ideas. The same is true of the period from 1914 to 1927, and the development of the Keynesian paradigm. Once more, the crisis period that runs from around 1974-87 saw that Keynesian paradigm that had dominated after WWII, challenged by the Chicago School of Monetarism, and it is that paradigm that has dominated since the 1990's. The next crisis phase of the long wave cycle is due around 2025, unless intervening factors have prolonged, whilst suppressing the strength of, the current boom phases. The basis for the critique of the Monetarist paradigm can already be seen in terms of its effect on producing astronomical asset price inflation, an expansion of the parasitic elements of capital, at the expense of the productive elements, by holding back real capital accumulation so as to repress interest rates, and thereby try to prevent the astronomical asset price bubbles from bursting.
a) [“Observations on certain Verbal Disputes”. Scepticism in Political Economy]
The contents of this work point to actual weaknesses in the theory of value as presented by Smith, Malthus and Ricardo, but it makes no attempt to resolve those weaknesses.
“This kind of scepticism always heralds the dissolution of a theory, it is the harbinger of a frivolous and unprincipled eclecticism designed for domestic use.” (p 110)
The author of the work writes,
““There is an obvious difficulty in supposing that labour is what we mentally allude to, when we talk of value or of real price, as opposed to nominal price; for we often want to speak of the value or price of labour itself. Where by labour, as the real price of a thing, we mean the labour which produced the thing, there is another difficulty besides; for we often want to speak of the value or price of land; but land is not produced by labour. This definition, then, will only apply to commodities” (op. cit., p. 8).” (p 110)
So, as far as labour is concerned, this is correct, because no distinction is made, by Ricardo, between labour and labour-power. The latter is a use value, or product, because it is also produced by labour (in the shape of the necessaries required to reproduce it, the labour involved in educating and training the worker etc.) and, as wage labour, also a commodity, with an exchange-value. The former – labour – is not a commodity, and does not have a value, but is itself the essence and measure of value. Labour is not a use value, product or commodity, but is an activity, a process, the activity of creating new value. But, the author does not draw out these distinctions, and thereby resolve the deficiency, but merely emphasises the existence of the problem itself.
In similar vein, it is correct that land has no value, because it is not a product of labour. All that the objection does is to emphasise the problem of equating price with value. But, as Marx points out, this objection is irrelevant given Ricardo's theory of rent, because, through it, Ricardo explains the price of land as nothing more than the capitalised rent. Given that Ricardo explains the existence of rent on the basis of his theory of value, no problem, in terms of the theory of value exists. It is only possible to arrive at a price for land on the basis of first deriving the value of commodities, of labour-power, and thereby of profit, and the rate of profit. But, even then, a series of other intermediate steps are required to derive rent, and then a price for land, which depends not only on the rate of rent, but also the rate of interest.
The same thing can be said of productive-capital, and the generation of profits. It is not possible to move directly from this stage to derive a price for shares and bonds (fictitious capital), issued to the providers of loanable money-capital that financed the purchase of the productive-capital. The profit produced by the productive-capital may rise, so that the amount paid out as interest to bond and shareholders may rise, causing bond and share prices to rise. On the other hand, interest rates may rise, so that the capitalised value of the shares and bonds falls, despite the higher profit.
It is this uncertainty that fuels gambling on the stock exchange, on the future prices of this fictitious capital, whose only real value is as a claim to a portion of future company profits, or a claim to future tax revenues, in the case of government bonds.
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